Strategic International Business Management: Lidl's Expansion

This report analyzes Lidl's strategic international business management, focusing on its global expansion plans. It begins with an introduction to Lidl, a German supermarket chain, and its objective of expanding globally while maintaining high-quality services at low prices. The report then assesses the macro-environmental factors of Norway and Mexico using PESTEL analysis, recommending Norway as a more suitable country for expansion due to its favorable economic and infrastructural conditions. The competitive intensity of Lidl's industrial environment is evaluated using Porter's Five Forces framework, highlighting the threats and opportunities the company faces. Furthermore, the report discusses the value chain model, emphasizing customer engagement, online community service, and loyalty bonuses. Finally, it explores various market entry modes available to Lidl, such as market analysis, internal capability assessment, and ramping up strategies, to successfully enter new markets.

Running head: STRATEGIC INTERNATIONAL BUSINESS MANAGEMENT
Strategic international business management
Name of the student:
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Table of Contents
Introduction......................................................................................................................................2
Task 2...............................................................................................................................................2
Task 3...............................................................................................................................................3
Task 4...............................................................................................................................................6
Value chain model.......................................................................................................................6
Task 5...............................................................................................................................................8
Recommendation.........................................................................................................................8
Justification..................................................................................................................................9
Conclusion:......................................................................................................................................9
References:....................................................................................................................................10

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Introduction
There are different categories of business issues which exists in each countries which has
to be considered before starting a new business in a new country. Strategic solutions has to be
identified so that each of the issues of the business are addressed. Lidl is a known German
supermarket company operating its business through a global chain across 30 different countries.
The company is looking to expand its business globally and is dedicated towards providing high
quality services with low prices. The company is known as an expert in curating products
offering top quality and best prices of their services. In order to evaluate its further expansion,
the following tasks are thus carried out in the report that would help the business to expand in the
global market. The report shall be focusing on the significance of the SWOT analysis which is
very much useful to critically analyze the competitive intensity of the industrial environment of
Lidl.
Task 2
Hence from the above PESTEL analysis, the score that is generated is highest for the
country of Norway and so it would be the best country where the company of Lidl can set up
their business. About 35,000 new business sectors are emerging in the country of Norway in
consideration to its macro environmental factors (Eilertsen and Hui 2015). The country has a
vast natural resource and a huge account of health and economy which will serve as one of the
beneficial factors for the company of Lidl to set up their business while providing highest
customer satisfaction to its customers with its services and goods. Considering the enhanced
business reputation of the local retailing markets in Norway it can be said that Lidl will be
getting huge amount of efficient human as well as non-human resources. The dependency on

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resources will be very much on the lower side if Norway is selected as the chosen country. The
capitalist economy of Norway can be very much useful for Lidl to select the exact location for
the business. The private property rights of Norway is much more flexible as compared with the
private property rights of Mexico. The taxation policies of Norway is much more flexible than
Mexico. Stability of the technologies which is required in the operational department is much
more in Norway as compared with the Mexican conditions. The competition coming from the
market competitors is much more in Norway; however the incorporation of advanced marketing
strategies can be very much useful in order to address the threats coming from market
competitors. Norway can provide wide range of project managers who have years of experience
working in the retail industry whereas there are very less retail organizations in Mexico. The
infrastructure facilities of the retail industry is much more in Norway as compared with the
facilities which are there in the retail industry of Mexico. The local retailing market conditions in
Mexico keeps on changing every moment unlike the stable market conditions of Norway. The
availability of the entrepreneurs is much more in Norway as compared with Mexico. The access
to the credit facilities is also much better in Norway as compared with the credit facilities which
is found in Mexico. Demand of the private retailed industry of Norway can be easily tracked due
to the availability online social media communities. There are very less licensing issues
associated with the commercial organizations in Norway as compared with the complex
licensing procedure.
Task 3
This section of the paper shall be focusing on the forces which have an effect on Lidl
which is a German based private retailing industry. This private retailing organization provides

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their services throughout Europe and USA. The competitive intensity of the industrial
environment of Lidl shall be evaluated in this task.
Porter’s 5 forces framework can be defined as the tool which can be very much useful to
analyse the competition of a business. The expected net profitability of the business can be
understood using this framework.
Forces Explanation
Threat of new entrants Considering the existing retail industries in both Norway and
Mexico, it can be said that this industry shall have MINIMUM
threat as very few organizations invests in opening any new
business in these countries due to their poor financial status and
low GDP.
Rivalry among
existing competitors
Lidl can face much difficulty due to the rivalry among the
existence competitors of Lidl such as Norges group and
Commercial Mexicana.
Threat of substitutes Wide range of products and services are offered by each of the
existing similar organizations in Norway and Mexico be a huge
threat for Lidl.
Bargain power of
buyers
Both these countries have numerous private retailing
organizations, thus the bargain power of the clients shall always be
on the higher side.
Bargain power of the
supplier
Bargain power of the suppliers can be a huge source of concern of
the investors or the steering committee of this organization as
there are numerous options for the suppliers due to the availability
of numerous private retailing organizations in each of these two
countries.
Table 1: Explanation of each of the forces
(Source: Created by the author)

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Thus, the fives forces cab be very much useful to understand that Lidl must be having a
long term business strategy and a financial feasibility report so that they can establish themselves
in the competitive market of each of these two countries.
According to Hensvik and Skans (2016), government regulations and taxation policies
are the biggest challenges of the global retailing organizations who tries to enter any new market.
However, as elaborated by Fang, Huang and Wierman (2018), accounting system must be kept in
place so that the accounting issues of entering a market is resolved. The competitive intensity of
the retailing industry is very much important for the calculation of the growth of a retailing
industry. The paper was very much useful to understand that there are many factors which has to
be considered in the first place before the selection of the business strategy required to start a
new business. The intensity and the market performance of the industrial rivals has to be
considered while launching any new products in the retailing industry. The paper provided an in
depth discussion about the different factors which play a huge role to influence the competitive
intensity between the firms such as the different categories of cost involved in start a new
business, identification of the market growth, and switching cost of the resources involved in the
business. The buyer power of the consumers of the retailing business keeps on changing every
moment which has to be tracked and monitored effectively to enhance the level of competitive
intensity. The different ways to attract the potential clients has to be understood by the strategic
managers of the new business as per the discussions made in this paper. This paper have
successfully discussed the effectiveness of using the Porter’s 5 forces analysis. The paper also
suggested that the role of the independent retailers is very much important for understanding the
competitive intensity of the retailing industry. The power of the suppliers also have to be
considered in the first place in order to identify the market competitors. Long term planning of

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the business as well as the consumer understanding procedure of the new business is also very
much depended on the bargain power of the suppliers of the retail industry. Thus, each of these
business aspects have to be understood in the first place before the starting of the planning phase
of the new business. The following unit of the paper shall be focusing of the significance of the
value chain model which might be very much important for Lidl to enter the market of Norway.
Task 4
Value chain model
Value chain model can be defined as the type of framework which helps in the analyzing
the activities of a business, so that new business strategies can be created and provide the
business a competitive edge over the other similar organizations in a specific region. The huge
amount of investment costs of a business can be restricted in the first place using the value chain
model. However, there is a limitation associated with value chain model such as the existing
business operations can be affected after the introduction of a new strategy based on the analysis
of this framework. The identification of the exact value added services is one of the most
significant way to maintain the business growth. Most of the potential consumers of a new
business can be identified on the basis of the selected of the value added services. Customer
acquisition and the member retention are the other significant aspects of the value added
services. There are diverse activities of value adding activities which can be followed in the
business environment of Lidl in terms of the customer engagement, online community service,
and providing loyal bonuses to each of the loyal consumers.

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Customer engagement
According to Murali, Poddar and Seema (2017), customer engagement can have a direct
impact on the net profitability of any retail business. However, as elaborated by Saeedi et al.
(2017), creativity of the organizational strategic manager cane be compromised if needs and
expectations of the consumers are met each and every time. The paper have successfully
highlighted that the role of the strategic managers is very much important to engage the
consumers of the retail industry. It can be said that the long terms investment of the business
depends upon the customer engagement procedure.
Online community service
As discussed by Kassem and Succar (2017), customer retention is one of the prime
benefits of online community service. The investigator of this paper highlighted that online
community service can be very much useful to understand the current business trends of the
business as well. However, as stated by Mathooko and Ogutu (2015), security and privacy issues
are the prime limitations associated with this value adding activity in most of business
organizations. Over ruling of the cultures are the other limitation associate with this value added
activity.
Loyalty bonus
As elaborated by Hollebeek, Srivastava and Chen (2019), providing loyal bonus can be
very much useful to promote the concept of brand advocacy. Price insensitivity and direct
referrals are the other positives associated with providing loyalty bonus to the consumers of any
business. But, according to Murali, Poddar and Seema (2017), spam messages which are shared

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with each of the consumers of a business due to due to the practise of providing loyalty bonuses
can have a negative impact on the growth and profitability of any business.
Task 5
This section of this report shall be highlighting the different modes of entry available to
Lidl for entering the market of both Mexico and Norway. There are different categories of entry
modes which are readily available for the global retail organizations which help them to enter a
new market such as the
 Market analysis can be a very entry mode for Lidl to make their mark on these countries.
 Assessment of the internal capabilities very much required for Lidl to understand the
effectiveness of the resources which is there in the business environment of this
organization.
 Identification of the market entry plans using a ramping up strategy can be very much
useful for Lidl to enter a new market especially in countries like Norway and Mexico.
According to Hensvik and Skans (2016), the selection of the market area must be
depended upon both the internal and external environmental analysis. The internal capabilities of
the organization must be the most important selection criteria regarding the selection of the
perfect entry mode. However, as discussed by Fang, Huang and Wierman (2018), market
conditions of business keeps on changing every moments, thus flexibility should be there in the
business modes so that the business can deal with any sort of changes.
Recommendation
Among each of the discussed entry modes, creation of market analysis can be the most
suitable entry mode strategy for Lidl. There are different categories of market analysis

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techniques which can be deployed in the working environment of Lidl so that they can enter the
retailing industry in Norway such as market segmentation, market information, and examination
of the current market trends. There are different categories of market analysis tools which are
increasingly used in the retailing industry such as Mixpanel, Buzzsumo, and Crowdbooster.
Justification
The target audience of each of the two countries can be identified using this entry mode.
The expectation and the perspective of each of the consumers of the retail industries of these two
countries can be understood in the first place using the marker analysis techniques. The overall
progression of the market can be managed and monitored in an organized manner using the
market analysis technique. It can also be said that the target audience of Lidl can also be
identified in the first place using the market analysis technique. It can also be said that the
strength and weakness of the new business can also be identified using this entry mode.
Conclusion:
Thus, from the report it can be concluded that Lidl should have an explosive marketing
strategy so as to stand out within the global market of Norway maintaining all the micro
environmental factors that are suitable for the company with respect to the needs of the
Norwegian country. Considering the market conditions of both Norway and Mexico it can be
concluded that the flexibility offered in the local markets of Norway much better than that of
Mexico. The availability of the resources and the entrepreneurs is much better in Norway as
compared with Mexico. Strategic market analysis is found to be one of the popular way to enter a
retailing industry with distinct business conditions.

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References:
Brendemo, Ø.R., 2015. Technology changes and the Norwegian accounting industry: A
profitability analysis perspective (Master's thesis).
Eilertsen, B.F. and Hui, E., 2015. The Profitability of Norwegian Salmon Farming Companies: a
study of profitability variation (Master's thesis).
Fang, Z., Huang, L. and Wierman, A., 2018. Loyalty programs in the sharing economy:
Optimality and competition. arXiv preprint arXiv:1805.03581.
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Hensvik, L. and Skans, O.N., 2016. Social networks, employee selection, and labor market
outcomes. Journal of Labor Economics, 34(4), pp.825-867.
Hollebeek, L.D., Srivastava, R.K. and Chen, T., 2019. SD logic–informed customer engagement:
integrative framework, revised fundamental propositions, and application to CRM. Journal of
the Academy of Marketing Science, 47(1), pp.161-185.
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Mathooko, F.M. and Ogutu, M., 2015. Porter’s five competitive forces framework and other
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